Close to Home: Restaurants can afford to pay a living wage
The Sonoma City Council recently approved the North Bay's first municipal minimum wage law, raising wages for 2,000 workers to $15 an hour by January 2021. Petaluma is scheduled to vote on a similar ordinance on Monday, Santa Rosa will hold a study session on Tuesday and Novato on July 23. Cotati and Sebastopol also are considering minimum-wage ordinances.
A controversy erupted in Sonoma when several Plaza restaurant owners implored the council to exempt “front of the house” tipped workers or include a “tip credit”' that would permit restaurants to pay servers less than the new minimum.
The city attorney concluded that either option violates California's Labor Code, which explicitly prohibits state and local government from establishing a two-tiered minimum wage for tipped and non-tipped employees.
What‘s this about?
The Bay Area's restaurant industry represents nearly 10% of the workforce, is the fifth-largest private-sector employer and has experienced robust growth since the 2007-2009 Great Recession ended.
The industry is a pillar of the Wine Country tourism and hospitality sectors. The Sonoma County Economic Development Board reported that the past decade's earnings and local tax revenue were the highest ever - despite a brief drop following 2017 fires.
But the majority of Bay Area restaurant workers, many of them women and minorities, are working poor who daily struggle to make ends meet.
According to 2018 California Employment Development Department data, the median wage for Sonoma County's cooks was $15.75 an hour and an average annual income $32,758; dishwashers received $12.12 an hour and $25,777 annually; and servers (including tips) earned $15.84 an hour and $32,957 annually.
The California Budget and Policy Project estimates that in Sonoma County a living, or self-sufficiency, wage for two parents working full-time to support two children and pay for child care, housing, health care, transportation and food is $23 an hour - about $81,000 annually.
The dilemma for high-end fine dining restaurants is how to adjust wages, yet simultaneously retain front-of-the-house workers who already earn livable wages.
A UC Berkeley Labor Center report on the economic impact of a $15 minimum wage in the North Bay indicates that operating costs for the food service and restaurant industry would increase by just 2.1% annually. Most restaurants could adjust to the wage hike by raising prices by less than 2% and absorbing higher wage costs due to increased worker retention, training and productivity.
However, fine dining restaurants might consider billing and compensation innovations that have been implemented in cities with minimum wage laws:
Include a “kitchen surcharge” of 3%-5% on all bills to reduce the wage gap between front-of-the-house and back-of-the-house employees, and practice “open book management” so that all employees know exactly how the surcharge is distributed.
Create a separate “kitchen service” tip line on the bill, so that customers may tip both front and back of the house.
Abolish tips and raise prices by 15%-20% to replace tips and pay livable wages - and provide comprehensive benefits to all employees - as the Sunflower Café in Sonoma has done.
Martin J. Bennett is instructor emeritus of history at Santa Rosa Junior College and lives in Sonoma.
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